Extension of taxes not an increase, Inslee insists

Democratic Gov. Jay Inslee pivoted Thursday on his campaign pledge not to increase taxes, saying that extending existing taxes due to expire next year would not break his promise.

Inslee said during his first news conference as governor that he’s open to extending a business and occupation tax and a beer tax, which could raise hundreds of millions of dollars over the next two years.

He also discussed possible legislation dealing with gun violence.

While running against GOP candidate Rob McKenna last year, Inslee said, “I would veto anything that heads the wrong direction and the wrong direction is new taxes in the state of Washington.”

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The key word in that promise is “new.”

Referring to a possible extension, Inslee said, “these do not increase taxes. They do not raise taxes on people over the existing level being paid today. Since they do not increase taxes, they are not a tax increase.”

Republicans disagree. “I think they are a tax increase,” said Rep. Gary Alexander, R-Olympia, the ranking Republican on House Appropriations. “If we do away with a tax exemption, that’s an increase.”

People are expecting the taxes to go away, he said. “For us to have any credibility with the public we have to follow through.”

Extending the taxes would require a two-thirds vote in the state House and Senate, something that has been nearly impossible in the past. This year could prove even more difficult because Republicans have taken control of the Senate with the help of two Democrats who crossed party lines.

Inslee entered office two days into a 105-day legislative session in which lawmakers will have to close a nearly $1 billion budget shortfall and respond to a state Supreme Court order to increase education funding.

Former Gov. Chris Gregoire, in her final budget released in December, advocated extending a 0.3 percent increase to the business and occupation tax paid by doctors, lawyers, accountants and others and a 50-cent-per-gallon beer tax due to expire next summer.

Gregoire saw it as a way to help meet state Supreme Court mandates for increased education funding.

Her budget office projected that extending both taxes by 3½years, and keeping in place certain exemptions, would yield $636 million in additional tax revenue over the next two years.

The temporary taxes were enacted in 2010 to raise revenues during the recession.

Gregoire had Inslee in mind when she put together her proposal last month, noting at the time that during his campaign, he “never said he wouldn’t continue current taxes.”

When Gregoire’s proposed budget came out, Inslee’s camp distanced itself saying there had been no coordination with her staff. “This is clearly a product of the Gregoire administration,” a source close to then governor-elect Inslee said.

On Thursday, his first full day as governor, Inslee stressed that he was not advocating extending the expiring taxes, but wanted to leave it on the table for discussion.

“I think it’s something that people ultimately will probably consider,” he said.

Inslee is expected to release his own budget proposal later this session.

The governor also covered a number of other areas in the news conference, including potential gun-control legislation.

The governor zeroed in on high-capacity ammunition clips.

“What I believe is that our state, it is not in the interest of health or safety or personal fulfillment to have to have ammunition capacity of 30 or 100 rounds on a weapon,” he said,

“I’m going to listen to my colleagues … and try to fashion the most broadly built consensus I can to get something through our Legislature that will meet the test of common sense.”